AEP2, LLC v. BMW of N. Am. LLC

• Decision Date: 22 September 2021
• Docket Number: 2021-UP-337,Appellate Case 2017-002481
• Parties: AEP2, LLC f/k/a 2AM Group, LLC, Respondent, v. BMW of North America, LLC, Appellant.
• Court: South Carolina Court of Appeals

AEP2, LLC f/k/a 2AM Group, LLC, Respondent, v. BMW of North America, LLC, Appellant.

No. 2021-UP-337

Appellate Case No. 2017-002481

Court of Appeals of South Carolina

September 22, 2021

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

Heard November 2, 2020

Appeal From Charleston County J. C. Nicholson, Jr., Circuit Court Judge

M Dawes Cooke, Jr., of Barnwell Whaley Patterson &Helms LLC, of Charleston, SC, Ashley Bryan Abel, of Jackson Lewis P.C., of Greenville, SC, and Anna Louise Strandberg, of Greenville, NC, all for Appellant.

Thomas H. Pope, III, of Pope Parker Jenkins, P.A. of Newberry, SC and John P. Freeman, of Seattle, WA, both for Respondent.

PER CURIAM

BMW of North America, LLC (BMW) appeals from the trial court's order denying its motion for relief from the entry of default and the court's order awarding AEP2, LLC, formerly known as 2AM Group, (AEP2) damages. We affirm.

BMW argues the trial court abused its discretion in refusing to set aside the entry of default. We disagree. See Richardson v. P.V., Inc., 383 S.C. 610, 614, 682 S.E.2d 263, 265 (2009) ("The decision whether to set aside an entry of default or a default judgment lies solely within the sound discretion of the trial court."); id. ("The trial court's decision will not be disturbed on appeal absent a clear showing of an abuse of that discretion."); In re Estate of Weeks, 329 S.C 251, 259, 495 S.E.2d 454, 459 (Ct. App. 1997) ("An abuse of discretion . . . occurs when the judge issuing the order was controlled by some error of law or when the order, based upon factual, as distinguished from legal conclusions, is without evidentiary support."); Stark Truss Co. v Superior Constr. Corp., 360 S.C. 503, 510, 602 S.E.2d 99, 102 (Ct. App. 2004) ("Rule 55(c), [of the South Carolina Rules of Civil Procedure (SCRCP)], allows the circuit court to set aside an entry of default 'for good cause shown.'" (quoting Rule 55(c))); Williams v. Vanvolkenburg, 312 S.C. 373, 375, 440 S.E.2d 408, 409 (Ct. App. 1994) ("Whether good cause is established is within the sound discretion of the [trial] court."); Sundown Operating Co. v. Intedge Indus., Inc., 383 S.C. 601, 607, 681 S.E.2d 885, 888 (2009) ("This standard requires a party seeking relief from an entry of default under Rule 55(c) to provide an explanation for the default and give reasons why vacation of the default entry would serve the interests of justice."); id. at 607-08, 681 S.E.2d at 888 ("Once a party has put forth a satisfactory explanation for the default, the trial court must also consider: (1) the timing of the motion for relief; (2) whether the defendant has a meritorious defense; and (3) the degree of prejudice to the plaintiff if relief is granted."); id. at 608, 681 S.E.2d at 888 ("The trial court need not make specific findings of fact for each factor if there is sufficient evidentiary support on the record for the finding of the lack of good cause."); id. at 608, 681 S.E.2d at 889 (stating that while "the criteria for obtaining relief from judgment under Rule 60(b)-mistake, inadvertence, excusable neglect, surprise, newly discovered evidence, fraud, misrepresentation-are relevant in determining whether good cause has been shown under Rule 55(c)[, ] . . . [n]o trial court should ever find good cause lacking based solely on the absence of a Rule 60(b) factor"); id. at 609, 681 S.E.2d at 889 (rejecting the petitioner's argument "that it should be granted relief from the entry of default because it should not be held responsible for the negligence of its insurance agent in failing to answer the complaint" and holding the argument was without merit "as the law is clear that an attorney or insurance company's misconduct is imputable to the client"); White Oak Manor, Inc. v. Lexington Ins. Co., 407 S.C. 1, 12, 753 S.E.2d 537, 543 (2014) (finding no error in the trial court's holding that losing the complaint did not constitute "good cause" under Rule 55(c)); Campbell v. City of North Charleston, 431 S.C. 454, 462, 848 S.E.2d 788, 792-93 (Ct. App. 2020) (affirming the denial of relief from an entry of default when the defendant's claims and insurance coordinator failed to take any action after receiving an email of the complaint from defendant's risk manager and "provided no explanation for her failure to open or forward the e-mail and only stated it was 'out of character'"); id. (holding "the [trial] court did not abuse its discretion by finding the failure to forward or open an e-mail did not satisfy the good cause standard articulated in Rule 55(c), SCRCP"); Dixon v. Besco Eng'g, Inc., 320 S.C. 174, 178-79, 463 S.E.2d 636, 638-39 (Ct. App. 1995) (affirming the trial court's finding that the defendant's misunderstanding of a deadline did not constitute good cause to set aside the entry of default); Heyman v. M.L. Mktg. Co., 116 F.3d 91, 93, 96-97 (4th Cir. 1997) (holding plaintiff was not entitled to Rule 60(b) relief from dismissal after plaintiff's bankruptcy trustee ignored the litigation file and missed the deadline for having new counsel enter an appearance, rejecting trustee's excuse that he was overworked because he was assigned as trustee in numerous other actions, and explaining that if the trustee "could not satisfactorily perform his obligations, he should not have accepted the appointment"); but see Columbia Pools, Inc. v. Galvin, 288 S.C. 59, 60-61, 339 S.E.2d 524, 524-25 (Ct. App. 1986) (reversing trial court's failure to set aside a default judgment when client told the attorney the incorrect date of service and the answer was one day late); Mictronics, Inc. v. S.C. Dep't of Revenue, 345 S.C. 506, 511, 548 S.E.2d 223, 226 (Ct. App. 2001) (reversing administrative law judge's order dismissing case when an attorney failed to appear at a hearing because he misunderstood the date of the hearing).

We hold the trial court did not abuse its discretion in refusing to set aside the entry of default. We find in-house counsel's actions in failing to recognize the complaint as one involving a new case and filing it in an incorrect electronic folder were similar to the employee in Campbell ignoring the email she received with a complaint. See Campbell, 431 S.C. at 462, 848 S.E.2d at 792-93 (holding "the [trial] court did not abuse its discretion by finding the failure to forward or open an e-mail did not satisfy the good cause standard articulated in Rule 55(c), SCRCP"). In addition, we find misfiling the complaint in an electronic folder or as in-house counsel stated in his first affidavit, "losing it in 'the proverbial shuffle, '" is not significantly different from physically losing the document, as in White Oak Manor, in which the supreme court upheld the trial court's refusal to lift the entry of default. See White Oak Manor, 407 S.C. at 12, 753 S.E.2d at 543 (affirming the trial court's holding that losing the complaint was not "good cause").

In addition, in the present case, in-house counsel received a copy of the complaint on February 21, 2017. While this copy of the complaint did not have the date of service on it, it did have the date of filing, which was February 8, 2017. Instead of attempting to verify when service was made on BMW by contacting its own agent for service, opposing counsel, or the Charleston County Clerk of Court's office, ^[1]in-house counsel simply told local counsel to use February 21, 2017, the date he received the courtesy copy of the complaint, as the date of service. See Nelson v. Coleman Co., 41 F.R.D. 7, 10 (D.S.C. 1966) (stating "surely due care on [the general counsel's] part required that he take action immediately by telephone with this court's Clerk's office, or his local counsel to determine the date of service"). We find the evidence in the record supports the trial court's ruling that BMW's actions in this case did not constitute good cause entitling BMW to relief under Rule 55(c).^[2]

2. We disagree with BMW's argument that because AEP2 failed to comply with the notices of damages provision in the Agreement, it should be limited in its right to damages and restricted from collecting prejudgment interest accrued before it gave notice to BMW. See Nash v. Tindall Corp., 375 S.C. 36, 39, 650 S.E.2d 81, 83 (Ct. App. 2007) ("Procedural matters are to be determined in accordance with the law of South Carolina, the lex fori." (quoting McDaniel v. McDaniel, 243 S.C. 286, 289, 133 S.E.2d 809, 811 (1963))); id. ("Lex fori refers to the law of the forum."); State ex rel. Medlock v. Love Shop, Ltd., 286 S.C. 486, 488, 334 S.E.2d 528, 530 (Ct. App. 1985) ("[E]ntry of an order of default is an admission by the defaulting party of the well-pleaded allegations of the complaint[.]"); id. at 489, 334 S.E.2d at 530 ("The defendant, by waiving a contest and suffering a default to be taken against him, admits the truth of the allegations, set out in the plaintiff's declaration or complaint....Hence the default authorizes the entry of any judgment warranted by the facts alleged." (quoting Gadsden v. Home Fertilizer &Chem. Co., 89 S.C. 483, 487-88, 72 S.E. 15, 17 (1911))).

While the law of New Jersey applies to the contract, the law of South Carolina regarding default applies in analyzing this procedural issue. In its complaint, AEP2 alleged that under the...